CHAPTER- I : INTRODUCTION Page1.1

1.2

1.3

1.4

1.5

1.6

Origin of the Study

Objectives of the Study

1.2.1 Broad Objectives

1.2.2 Specific Objectives

Methodology of the Study

Sources of Data & Information

1.4.1 Secondary Sources

1.4.2 Primary Sources

Scope & Significance of the Study.

Limitations of the Study.

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1.1 Origin of the study:

This Internship Report is prepared as a partial fulfillment of the requirement of BBA

program. The study paper based on “Overall Banking Activities of Jamuna Bank

Limited”. To fulfill the report properly I have discussed industry analysis, competitive

analysis, and overview and performance analysis of Jamuna Bank Limited. In Jamuna

Bank Limited, I was assigned in the Origination Department. My internal supervisor

was M. Shakhawat H. Bhuiyan, Joint Director, Bangladesh Bank.

1.2 Objectives of the Study:

1.2.1 Broad Objectives:

To understand the basic approaches of banking operation in Bangladesh.

1.2.2 Specific Objectives:

Understanding Banking environment.

Understanding the Banking activities.

Understanding the Cheque Clearing.

Understanding the Accounts opining procedures.

Understanding the Import.

Understanding the Export.

1.3 Methodology of the Study:

The study is a result of the discussion with my supervisor.

Analyze Different type of Ratios.

Following a report sample.

Prepare comparative Analysis.

Different statistical tools are used.

1.4 Sources of Data & Information:

In conducting the study, data and information have been collected from different

sources. All these data were collected from the secondary sources and very few from

primary sources. The sources of data include the following:

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1.4.1 Secondary Sources:

Different statements of bank.

Annual report of Jamuna Bank Limited.

Consultation of related books and publications.

Vouchers, leaflets, loan files, of the bank.

Files, balance sheet and various documents of Jamuna Bank Limited.

1.4.2 Primary Sources:

Personal observation.

Discussion with bank’s officers.

Desk work in different section/division.

1.5 Scope & Significance of the Study:

Scope of the study is quite clear. Since Origination Department is dealing with all

types of loan & deposit activities in the bank, studying these core themes,

Opportunities are there to learn other aspects of SME matters.

Concept of General Banking and its impact in overall economy of Bangladesh

Importance of Banking in context of Bangladesh

Small entrepreneurs of rural –urban spectrum are enjoying the Jamuna Bank Limited

loan facility without the presence of bank at rural area.

Virtual banking concept through SME banking.

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1.6 Limitations of the Study:

The study has suffered from a number of barriers

Data from Jamuna Bank Limited is highly confidential for the outside people

and I had no authority to use the core banking software.

Main limitation was, I was assigned in the deposit origination site but I need

information about loan origination department. So I have faced some problem

to collect information & to use the information.

Time is also a big constraint for my research. I have to submit a broader deal

in a shorter form of outcome.

I had to go under my day-to-day job responsibility that I was supposed to do

so. So I could get few more time to spend in collecting data for preparing my

internship report.

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CHAPTER- II : ORGANIZATIONAL OVERVIEW 6- 12

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

Historical Background of Jamuna Bank Ltd

Goals And Objectives Of Jamuna Bank Limited

Vision And Mission

Board of Directors

Management Team

Branches of Jamuna Bank Ltd

Branch Structure

List of Branches of Jamuna Bank Limited

List of Divisions of Jamuna Bank Limited

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2. 1 Background Of Jamuna Bank Limited:

. Jamuna Bank Limited (JBL) is a Banking Company registered under the

Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A,

Dhaka-1000. The Bank started its operation from 3rd June 2001. The Bank undertakes

all types of banking transactions to support the development of trade and commerce

of the country. JBL's services are also available for the entrepreneurs to set up new

ventures and BMRE of industrial units. Jamuna Bank Ltd., the only Bengali named

new generation private commercial bank was established by a group of winning local

entrepreneurs conceiving an idea of creating a model banking institution with

different outlook to offer the valued customers, a comprehensive range of financial

services and innovative products for sustainable mutual growth and prosperity. The

sponsors are reputed personalities in the field of trade, commerce and industries.

The Bank is being managed and operated by a group of highly educated and

professional team with diversified experience in finance and banking. The

Management of the bank constantly focuses on understanding and anticipating

customers' needs. The scenario of banking business is changing day by day, so the

bank's responsibility is to device strategy and new products to cope with the changing

environment. Jamuna Bank Ltd. has already achieved tremendous progress within

only eight years. The bank has already ranked as one of top quality service providers

& is known for its reputation.

At present the Bank has real-time centralized Online banking branches (Urban &

Rural) throughout the Country having smart IT-Backbone. Besides these traditional

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delivery points, the bank has ATM of its own, sharing with other partner banks &

Consortium throughout the Country.

2. 2 Goals And Objectives Of Jamuna Bank Limited:

The goal of Jamuna Bank Limited, is to be the number one private commercial bank

in Bangladesh and the objectives are to be the best performing bank with world class

services.

2. 3 Vision And Mission:

To become a leading banking institution and to play a pivotal role in the development

of the country.

The Bank is committed to satisfying diverse needs of its customers through an array

of products at a competitive price by using appropriate technology and providing

timely service so that a sustainable growth, reasonable return and contribution to the

development of the country can be ensured with a motivated and professional work-

force.

cutting-edge technology, a dynamic workforce and a wide array of financial products

and services.

The Vision of “Jamuna Bank Limited” is based on a philosophy known as JBL. We

envision Jamuna Bank Limited to be:

One of the Best Performing Banks in Bangladesh

The Bank of Choice

A Truly World-class Bank

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2. 4 Board Of Directors:

The Board of Directors consists of 15 members elected from the sponsors of the

Bank. The Board of Directors is the apex body of the Bank.

Chairman

Vice Chairman

Directors & Sponsors

Managing Director

Company Secretary

Chief Adviser

Tax Advisor

Auditors

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2. 5 Organizational Structure:

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Sponsor & Shareholders

Board of Directors

Managing Director

Executive Committee

Policy Committee

Chief Adviser

Company Secretary

Deputy Managing Director

2. 6 Organogram Of Jamuna Bank Limited:

The organogram of Jamuna Bank Limited is given below with a flowchart

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Assistant OfficerShareholders

Junior OfficerShareholders

OfficerShareholders

Senior OfficerShareholders

Junior Assistant Vice PresidentShareholders

First Assistant Vice PresidentShareholders

Assistant Vice PresidentShareholders

Senior Assistant Vice PresidentShareholders

Vice PresidentShareholders

Senior Vice PresidentShareholders

Executive Vice PresidentShareholders

Senior Executive Vice PresidentShareholders

2. 7 Branch Structure:

The branch structure of Jamuna Bank Limited Motijheel Foreign Exchange– 0018

branches is given below by a flowchart

The Jamuna Bank LTD, Motijheel Foreign Exchange -0018 is consisted of four

departments with eight efficient employees including the Branch manager and deputy

manager. There is a Vice President for managing the branch activities; there is a First

assistant Vice President who organizes the credit department, there are some senior

officers, officer and junior officers in the branch.

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Vice President &

Manager of the Branch

First Asst. Vice President & Deputy Manager of the

branch

Credit Department

General Banking Department

Clearing & NRB

Department

Cash Department

1 Mohakhali Branch2 Sonargaon Road Branch3 Moulvi Bazar Branch4 Goala Bazar Branch5 Agrabad Branch6 Dilkusha Branch7 Beani Bazar Branch8 Sylhet Branch9 Shantinagar Branch10 Gulshan Branch11 Motijheel Foreign

Exchange12 Nayabazar IB Branch13 Naogaon Branch14 Mohadevpur Branch15 Khatungonj Branch16 Konabari Branch

17 17 Bhatiary Branch 18 Foreign Exchange Branch

1 9Chistia Market Branch20 Jubilee Road IB Branch21 Bogra Branch22 Baligaon Bazar Branch23 Narayangonj Branch

24 Dhanmondi Branch

25 Rajshahi Branch26 Bashurhat Branch28 Bahaddarhat Branch29 Sirajgonj Branch30 Banani Branch31 Mawna Branch32 Ashulia Branch33 Dinajpur Branch34 Kushtia Branch

35 Kadamtoli Branch 36 Aganagar Branch

37 Uttara Branch38 Comilla Branch39 Azadi Bazar Branch40 Laksam Branch41 Anderkilla Branch42 Mirpur Branch43 Malibagh Branch44 Madaripur SME Agri

Branch45 Thakurgaon Branch46 Barisal Branch47 Rangpur Branch

48 Feni Branch 49 Savar Branch 50 Gazipur Chowrasta Branch

51 Chapainawabgonj SME Agri Branch52 Rayerbag Branch53 Munshigonj SME Agri

Branch 54 Nasirabad Branch

55 Kazipur SME Agri Branch56 Jurain SME Agri Branch57 Shetabgonj Branch58 Sherpur SME Agri Branch59 Jessore Branch60 Islampur Branch61 Ring Road Branch

62 Mymensingh Branch63 Rupshi Branch64 Pabna Branch65 Tongi Branch66 Dewanhat Branch67 Progati Sarani Branch68 Moulvi Bazar SME Agri

Branch69 Sherpur Branch70 Natore Branch71 Ashugonj Branch72 Tongi Bari Branch73 Barura Branch

74 Chittagong Zone Office

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2.8 List of Branches of Jamuna Bank Limited

2.9 List of Divisions of Jamuna Bank Limited

1 Treasury Division

2 International Division

3 Credit Division

4 MD's Secretariat

5 Credit Administration Division

6 PR & Brand Communication

Department

7 Anti Money Laundering Division

8 Card Division

9 Chairman's Secretariat

10 Board Division

11 Human Resources Division

12 Banking Operation Division

13 Inventory Management

& Maintenance Department

14 ICT Division

15 ICC Division

16 Corporate Division

17 General & Common Services Division

18 Share Division

19 Financial Administration Division

20 JB Training Institute

21 SME Division

22 Retail Banking Division

23 Risk Management Division

24 Islamic Banking Division

25 MD's Office

26 Research & Development Wing

27 Offshore Banking Unit

28 Capital Market Operation Division

29 Marketing & Development Department

30 Merchant Banking Division

31 Law & Recovery Division

32 Monitoring and Vigilance Division

Credit Rating of Jamuna Bank Limited

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Credit Rating Agency of Bangladesh Limited (CRAB) upgrades the rating of Jamuna Bank Limited

to AA3 from A-1 and reaffirms short term rating ST-2.

Chapter: 3 || General Banking3.1 Products and Services 153.2 General Banking 153.3 Account Opening 15

3.3.1 Regular Saving Account Products 153.3.2 Fixed Deposit Account 173.3.3 Current Account 17

3.4 Rules of Opening an Account3.4.1 In The Name of Individual 173.4.2 In Joint Name 183.4.3 Proprietorship 183.4.4 Partnership 183.4.5 Limited Company 183.4.6 Societies, Clubs And Associations 193.4.7 Non-Government Organization (NGO) 19

3.5 DD /Pay Order/TT3.5.1 Demand Draft 193.5.2 Pay Order 193.5.3 Telegraphic Transfer 203.5.4 Cash Department 203.5.5 Deposit Cash In Customer’s Account 20

3.6 Make Payments from Customer’s Account 213.7 Types of Cheque 21

3.7.1 Open Cheques 213.7.2 Crossed Cheque 22

3.8 Clearing And Transfer Department 223.8.1 Inward Clearing 223.8.2 Outward Clearing 233.8.3 Outward Money Transfer Flow Chart 24

3.9 IBC/OBC 25

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Current Rating Previous RatingLong TermAA3

Long TermA-1

Short TermST-2

Short TermST-2

Date of Rating03.05.2012

Date of Rating13.04.2011

3.9.1 OBC Collection Process 263.9.2 IBC Collection Process 27

3.10 Credit Department 273.10.1 Loan Disburse Process 273.10.2 Credit Related Term 28

3.1 Products and Services:

The Products and services Of Jamuna Bank Limited Motijheel Foreign Exchange –

0018 Branch can be described by the departments of a commercial banks branch.

These departments are:

General Banking

Cash department

Clearing department

Foreign Exchange department

Credit Department

Accounts department

3.2 General Banking:

The general banking consists of account opening, front desk management etc. now

these parts are described below:

3.3 Account Opening

This department is responsible for the opening and closing of accounts. In

consideration of Jamuna Bank Limited, opening and/or continuing to maintain any

account, the Account Holder/Depositor or Investor would be bound by the terms and

conditions written on the account opening form.

The first part establishes the preference regarding the type of account to be

maintained. The Jamuna Bank Limited has various choices offered in this regard are:

3.3.1 Regular Saving Account Products:

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Mutual Trust Bank has verities of saving account products. These regular saving

account products are described below:

Jamuna Bank Limited Inspire

Jamuna Bank Limited Inspire provides a range of enhanced services, while letting

you enjoy unique benefits of getting return on your deposit monthly instead of

traditional half yearly. With extra access and convenience of banking, enjoy the full

convenience of a savings account and access your savings anytime.

Jamuna Bank Limited Ruby

Jamuna Bank Limited Ruby enables today’s independent women to enjoy hassle-

free banking services. Besides the core Jamuna Bank Limited banking advantage,

Jamuna Bank Limited Ruby, an exclusive savings account for women, is packed with

special benefits for our women customers. Enjoy your present and plan for the future,

with this rewarding savings account.

Jamuna Bank Limited Junior

Jamuna Bank Limited Junior is one kind of savings account for fewer than 18

students. This account will be maintained through guardian. Under this account they

can enjoy free account maintenance, free internet banking as well as free debit card.

Jamuna Bank Limited Graduate

We understand that starting college or university can be both exciting and

challenging. That's why Jamuna Bank Limited Graduate, a contemporary savings

account, is packed with everything you need to meet all your banking needs, offering

monthly income while helping you save for future financial emergencies.

Jamuna Bank Limited Senior

Jamuna Bank Limited Senior has been designed keeping in mind the fact that a

senior citizen's banking requirements are wholly different and deserve special

attention. We like to empower our senior citizens, so that they can carry out their day-

to-day banking transactions independently, and with dignity and confidence. Now the

true pleasure of seniority is in your grip.

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Brick By Brick

Brick By Brick is a savings account. We know Drops of water make an ocean. Your

habit of regular savings will provide you comfort in the future. Brick by Brick is a

unique monthly savings plan which builds up over the years and provides a lump sum

amount at maturity.

Jamuna Bank Limited Education Plan

We know how important it is to plan for your child's financial security. Jamuna Bank

Limited has the solution to help you do that while showing the virtue of saving, in

your child. Jamuna Bank Limited Junior is a savings account for minors that offer the

opportunity to save for today and the future.

3.3.2 Fixed Deposit Account

Fixed Deposit Account refers where the amount of the account will be fixed for a

certain period of time. There are some other kinds of fixed accounts like:

Monthly Benefit Plan

This plan offers you to generate monthly income out of your deposit. It has been

designed to help and assist conscious savers from all strata of the society

Jamuna Bank Limited Double Saver

Jamuna Bank Limited Double Saver is a fixed deposit scheme where the deposit

doubles in 6 (six) years.

3.3.3 Current Account

In this kind of account a customer can deposit his money and can write one or more

check to withdraw their money. For doing this notice is not required. He can deposit it

whenever he/ she want to and also can withdraw it whenever he/ she want to.

3.4 Rules of Opening an Account

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There are some factors that should be considered in case of opening a bank account.

These factors are described as below:

3.4.1 In The Name of Individual

The client has to fill up an account opening form. Terms and conditions are printed on

the back of the form. The form contains the declaration clause, special instructions

etc. two copies of passport size photograph duly attested by the introducer are affixed

with the form.

3.4.2 In Joint Name

In this type, the formality is same as individual account, but in the special instruction

clause, either or ‘survivor’ or ‘former or survivor’ clause is marked.

3.4.3 Proprietorship

In addition the customer has to submit the valid Trade License and Tax Paying

Identification Number (TIN) along with the application.

3.4.4 Partnership

In case of partnership account, the bank asks for,

A copy of the partnership agreement (Partnership Deed)

A letter signed by all the partners containing the following particulars.

The name and addresses of all partners

The nature of the firm’s business

The name of the partner authorized to operate the account in the name of the firm,

including the authority to draw, endorse and accepting the bills and mortgage and

sell the properties belonging to the firm.

3.4.5 Limited Company

On having the desire to open an account from a limited company, an Jamuna

Bank Limited Officer asks for the following documents:

Registration Certificate from the Registrar of Joint Stock of Companies

Certificate of Incorporation

Certificate of Commencement of Business

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Memorandum of Association

Articles of Association

Copies of Annual Accounts

Copies of the Board’s resolution, which contains

a) The name of the persons who have been authorized to operate the bank account

on behalf of the company.

b) The name of the persons who are authorized to execute documents with the bank

on company’s behalf.

3.4.6 Societies, Clubs And Associations

In case of these sorts of accounts Jamuna Bank Limited requires the following

documents:

Registration Certificate under the Societies Registration Act, 1962

Copies of Memorandum, Articles of Association

Resolution of the Managing Committee.

Power of Attorney to Borrow

3.4.7 Non-Government Organization (NGO)

The account opening procedure is same but in exception is that the Registration

Certificate from the Social Welfare Department of Government must be enclosed with

the application.

3.5 DD /Pay Order/TT

3.5.1 Demand Draft

A method used by individuals to make transfer payments from one bank account to

another. Demand drafts are marketed as a relatively secure method for cashing

checks. The major difference between demand drafts and normal checks is that

demand drafts do not require a signature in order to be cashed.

3.5.2 Pay Order

A Pay Order, similar to a banker's chaeque is also payable locally, the only difference

is that in case of a pay order, the bank is directing the payee bank to pay the amount

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mentioned on the pay order to the person/organization so mentioned or his order, i.e.

any other person/organization.

Both pay orders and demand drafts are used by individuals to make transfer payments

from one bank account to another. The main difference between the two is that while

a demand draft is a written order directing the payment to be made to a third party

outside your city, a pay order is drawn for the third party within your city.

3.5.3 Telegraphic Transfer

TT means Telegraphic Transfer, an electronic method of transferring funds.

Telegraphic Transfers are also known as Telex Transfers. A banking term commonly

called "T/T," meaning a cable message from one bank to another in order to affect the

transfer of money. Telegraphic Transfers are usually fairly expensive, due to the fast

nature of the transaction.

3.5.4 Cash Department

The cash department is the most important department of a commercial bank. It

receives cash from customers and then deposits it into the accounts of the customers

and maintained their balances. The officers in this department are called teller this

department involves in two activates:-

1. Deposit cash in customer’s account

2. Make payments from customer’s account

3. Day end cash balancing

3.5.5 Deposit Cash In Customer’s Account

When the customer want to deposit amount in his account at opening of account or

after that then he has to fill a deposit slip that shows the amount and the account in

which the cash will be deposited. Then teller will receive amount and credit the

customer’s account that shows increase in customer’s bank account.

Cash may be deposited either by deposit Slips for SB/ CD/ CC accounts or by other

credit voucher like single credit voucher, pay order/ Draft/ T.T. application forms.

Branches shall ensure the following:

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I. Cash receiving officer shall check the deposit slip/ credit voucher/ application

form as to its title of account, number and amount in words and figures.

II. The cash currency notes shall be counted physically /by cash counting

machine as per denominations of the currency notes on the back of the

voucher /deposit slip. The officer will enter the particulars in the cash

Receiving Register and sign on the related deposit slip/voucher and affix

"Cash Received" Stamp with date. He/she shall write the amount in words and

figures in red ink across the deposit slip/voucher/ application form in token of

receipt of the money. He /She shall send the register along with the deposit

slip/voucher for signing on the same and authenticating the receipt in the

register by the in-charge of the department.

III. The officer in-charge shall retain the original of deposit Slip and other

vouchers and send them to respective desk for postings/actions. The duplicate

voucher (counter foil) shall be handed over to the depositor/client.

IV. At the close of business the cash receiving officer shall add all the entries in

the register and if agreed with the actual cash received by him, shall hand over

the register for checking by officer-in-charge.

V. Receiving Cash officer will hand over the cash to the entire cash in-charge

duly checked by him.

3.6 Make Payments from Customer’s Account

When the customer draws a cheque on the bank to pay a certain amount then teller

will debit the customer’s account that shows reduction in his account balance.

3.7 Types of Cheque

There are two main types of cheques that are

A) Open Cheques

B) Crossed Cheques

3.7.1 Open Cheques

Open Cheques are those cheques, which are paid across the counter of the bank. Open

cheques may be

I) Bearer Cheques

II) Order Cheques.

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I) Bearer Cheque

If the drawer orders the bank to pay a stated sum of money to the bearer, it is called a

bearer cheque. Any person who lawfully possesses a bearer cheque is entitled to

receive payment of that cheque.

II) Order Cheque

The amount of this cheque is payable to the person whose name is written on the face

of the cheque. The amount is paid at counter after identification of that person.

3.7.2 Crossed Cheque

The amount of this cheque is not paid at counter. The amount of this cheque is

transferred to the person’s account whose name is specified on the cheque. Two

parallel transverse lines are drawn across the face of the cheque.

3.8 Clearing And Transfer Department

Every bank performs the function of paying and collecting.  The cheque drawn on

other bank by the customers of the bank is collected by the bank for or without

charging fee is called clearing.  The bank through the clearing house (Bangladesh

Bank) performs the function of clearing. Clearing is facilitated by Bangladesh Bank

Clearing house. Clearing is a faster and convenient cheque processing method that

customers deposit to bank. It is inter banking debit and credit transfer process among

the banks which are under control of Bangladesh Bank Clearing house. Clearing

Department plays a vital role in General Banking. This department receives cheques,

DD, P.O. etc from depositors attached with a deposit slip.

There are two types of Clearing

I) Inward Clearing

II) Outward Clearing

3.8.1 Inward Clearing

Inward clearing means the cheques received by the bank from other banks. These -

Inward clearing - cheques are the cheques drawn by the bank/branch customers on

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their account in favor of other parties. On receipt of the inward clearing, the cheques

are posted to the various accounts on which they are drawn - meaning the accounts of

the cheque issuer or drawer with the bank is debited to the account and the payment is

made to the bank presenting the cheque. The procedure of inward clearing is:

I. Principal Branch/Main Branch shall receive cheques etc drawn on Mutual

Trust Bank Limited branches from the Clearing House. On receipt of the

cheque etc. they shall segregate the same branch-wise and issue IBDA on

branches against total amount of cheque etc. and shall arrange delivery of the

IBDA together with the cheques etc. within Clearing House time schedule.

II. Branches shall send the cheques dishonored by them supported by IBDA

issued on Principal Branch/Main Branch, within Clearing House time schedule

for enabling Principal branch/ Main Branch to return these instruments in the

2nd Clearing House (Return House).

3.8.2 Outward Clearing

Outward clearing means the cheques sent for collection. When a particular branch

receives instruments drawn on the other bank within the clearing zone and sends those

instruments for collection through the clearing arrangement is considered as Outward

Clearing for that particular branch. This branch is known as collecting branch.

In other words, inward clearing is for our branch and outward clearing is for other

banks or branches. When we receive inward clearing we have to debit

our customer account and when we receive outward clearing we have to send it to

relevant bank for payment and we credit the amount to Customer Account.

All cheques, demand drafts and other credit instruments tendered for the credit of

customers account will be delivered by the depositor at the clearing counter. Any

deposits received by post will also be sent over to the clearing counter. The counter

officer shall at the time of receipt examine such deposits carefully to ensure that:

1. The name of the account is very clearly written on the Deposit slips.

2. The particulars of deposits such as cheque numbers, figures with in words, date,

names of bank etc. are properly entered on the deposit slip.

3. The depositor has signed the Deposit Slip.

4. On item deposited payees discharge and the chain of endorsement, are in order.

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I. All cheques and other instruments will be crossed immediately on receipt with

the banks special crossing stamp. Items intended/selected for the next day’s

clearinghouse will be branded with the bank's clearing stamp with date. If the

deposits are made at a time when it is too late for these to be presented to

drawee banks the same days the stamp "Too late for todays clearing" will be

affixed on the counter foil.

II. Scan all the cheques and send them to principal branch clearing Section.

III. Principal branch accumulate the images of all branches clearing cheques and

send it to Bangladesh bank clearing House

IV. Bank also prepare, another summery sheet (Validation Sheet) from computer

which contain the total a number of cheques etc. delivered to different banks

in the Clearing House.

V. All clearing item will be passed through the bank's Principal branch/Main

Branch's Account with Bangladesh Bank.

VI. Entries to be passed by Principal branch/ Main Branch and corresponding

branch finally credited it to Customers account and then it is matured for draw.

VII. In case of return of cheques unpaid in the Clearing House, Local Office /Main

Branch shall issue IBDA on the branch which lodged the cheques in clearing

to reconcile the accounts.

VIII. All IBDAs originated in connection with Clearing House shall invariably be

responded on the same day and under no circumstances shall be kept pending.

3.8.3 Outward Money Transfer Flow Chart

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Verify Clients Submitted Cheque and receive it for clearing

Credit the Amount to Client Account and debit from Branch GL

Credit the same amount to Branch GL and Debit from Principal branch GL

Principal Branch credited same amount to their GL and Debit from Bangladesh Bank

Bangladesh Bank credit its Account and Debit from corresponding Bank’s Account of which cheque Client has submitted

Finally the amount is matured and qualified for draw

Clearing House

In Bangladesh Bank, there is a very large room, which contains fifty (50) or more

tables for each bank that is called the clearing house.In clearing house section,usually

the authorized officials attends all the cheques for collection in their bank drawn on

other banks and settle down their transaction by the arrangement of clearing

house,Usually two houses sit for settlements which are as follows.

Nature of Clearing House

1st Clearing House

Return Clearing House or High value house

First House

Generally all the collection cheques are collected from other banks drawn on Jamuna

Bank Limited in this first clearing house. First house sit at 10 AM and return house

sits at 5 PM.

Same day house or High Value House

Only the branches of member banks located in Motijheel Foreign Exchange area and

the cheques value which is equal or above TK500000/= enjoy the same day clearing

facility. The same day house starts at 10AM and its 11.00 AM.

3.9 IBC/OBC:

By OBC, we mean that those cheques drawn on other banks which are not within the

same clearing house. Officer gives OBC seal on this type of cheques and later sends a

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letter to the manager of the branch of the some bank located in the branch on which

cheque has been drawn. After collection of that bill branch advises the concerned

branch in which cheques has been presented to credit the customer account through

Inter Branch Credit Advice (IBCA).

In absence of the branch of the same bank, officer sends letter to manager of the bank

on which the cheques is drawn. That bank will send pay order in the name of the

branch. This is the procedure of OBC mechanism. Actually OBC comes from the

outside bank’s branch, or inter branches. Suppose AGRANI Bank, Jatrabari Branch

sent a Cheque, which no: 012536, Tk. 5,00,000/- to Jamuna Bank Limited

against AGRANI Bank Motijheel Foreign Exchange Corp. Branch. So this cheque

could be an OBC. Now what Jamuna Bank Limited has to do? Jamuna Bank Limited

tries to collect this cheque through Bangladesh Bank Clearing House, and credited

clients account.

3.9.1 OBC Collection Process:

Create a Voucher against OBC: S/D A/C   OBC Tk. 5,00,000/-    

.10% Cut off as Commission on OBC Tk. 500

15% Cut off as Vat on Others              Tk.  75

Tk. 20/- Cut off as Postage Recovery  Tk.  20

Total                                                   Tk. 595/-

Transfer

I. Transfer Book shall be maintained for entering transfer cheques/vouchers.

II. Serial number shall be allotted both on the debit and credit side of the book,

which shall be required for recording the daily transactions. The same serial

number shall be noted on the voucher entered in the book including their contra

credit and debit voucher and or a set of credit or debit vouchers of a transaction.

III. Entries in the debit and credit column of the book shall be directly made from

the respective debit and credit vouchers. At the end of the banking hours the

total of the debit and credit shall be arrived at and tallied with the computer

figure in Transfer Head.

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IV. Transfer Stamp is affixed on the face of voucher; Vouchers are released from

Transfer book. It is balanced and signed by the writer and Book is checked and

signed by the authorized officer.

V. In a computerized system scroll is done by the computer system. But branch

shall maintain the Transfer Book manually as a safe guard against easy

detection of mistakes and issuing vouchers if any.

3.9.2 IBC Collection Process

3.10 Credit Department

The credit department of a bank is the basic element in its organization. It is true that

in the past many banks have been able to do without credit departments and that at the

present time there are not a few of them - chiefly the smaller and less advanced types

of institution - which have no credit departments, or only very rudimentary

organizations of the sort. These, however, usually accept the work of credit

departments operated by their correspondents. The true work of a bank credit

department is done whenever any loan is made. It may be that the work of credit

analysis is incidentally performed by the president or a vice-president of the bank or

by some other assigned officer who happens to have charge of the work of lending,

The Credit Departments mission is to help sell the company’s products and services to

all qualified customers while providing the best possible credit and collection services

that we can. 

Credit department main workings areas area as follows:

Offer/inform to Customers about different loan product

To know details about Customer business

Credit proposal preparation

Provide checklist and relevant form

Verify all required document

Place for approval with all supporting documents

After Approval disburse the amount to respective account

3.10.1 Loan Disburse Process

Before issuing any kind of loan we need to the following task

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1. To know details about customer Business

2. Credit proposal preparation

3. Provide checklist and relevant form

4. Place for approval with all supporting documents

5. After Approval disburse the amount to respective account

For getting loan clients need to submit the following documents and concerned credit

officer will verify.

*Loan application form

*Applicant’s National ID/Driving License/Passport copy

*Photographs of applicants (studio photo)

*Salary certificate for salaried person

*Guarantor

*Bank Statement

*Others Branch liability

*Others Bank Liability

*Photocopy of Utility Bill documents

* Trade license

* Personal and business account statement for last one year

* Applicant’s TIN certificate

* Copies of all existing loans’ sanction letter and repayment history for last one year

 *Rental deed for rental income and ownership deed of rented property

 *Apartment allotment letter/Deed of agreement/property ownership deed

 *other all property related documents’ copy

All documents are not necessary for all schemes

After physical verification of clients Business and property as well as all the

documents concerned credit officer prepare check list, LDCL(Loan documentary

Check list) and fill up CIB form and will send it to Bangladesh Bank CIB department

through Head office. After getting no obligation bank can sanction loan to the client.

3.10.2 Credit Related Term

Primary Security

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Primary security means specific assets against which loan granted. In the case of term

loan for factory building in this regards "Land' is primary security. Further in the case

of working capital loan, "stock and book debts" is considered as primary security and

if any additional security provides other than "primary Security" it is called collateral

security

Collateral Security

Specific asset (such as land or building) pledged as a secondary (and subordinate)

security by a borrower or guarantor. The principal security is usually the borrower's

personal guaranty, or the cash flow of a business. Except for highly creditworthy

customers (who can get loans against only their signatures) lenders always demand a

collateral if the primary security is not considered to be reliable or sufficient enough

to recover the loan in case of a default. A lien is created when the collateral is

registered in the public records office, giving the registered lender priority over other

lenders on the same asset or property. Lenders have the legal right to seize and sell

collateral if the borrower cannot pay back the loan as agreed. Sometimes the asset

being financed (such as accounts receivable, inventory, and machinery) is itself used

as collateral; in home mortgages the property being bought serves as collateral. See

also collateral value and cross collateral clause.

CIB (Credit Information Bureau)

A Credit Information Bureau is an organization that collects and collates credit data

on borrowers from its member financial institutions. The financial data is then

aggregated in system and the resulting information (in the form of credit reports) is

made available on request to contributing member financial institutions for the

purposes of credit assessment, credit scoring and credit risk management. The major

purpose of this database is to enable the financial institutions to know the credit

history of their prospective customers thus enabling them to make a more prudent

decision.CIB form is Bangladesh Bank’s necessary prerequisite to make any loan .To

create a disciplined environment for borrowing, the automated CIB service provides

credit related information for prospective and existing borrowers. With this improved

and efficient system, risk management will be more effective. Banks and financial

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institutions may furnish credit information to CIB database 24 by 7 around the year;

and they can access credit reports from CIB online.

LDCL (Loan Documentary Check list)

Checklist is very much essential for making any loan, By this checklist bank can

forecast the loan risk. Checklist to be used in connection with loans (both commercial

and consumer) to ensure the proper notices and disclosures are given and procedures

are followed. One set is used by the lender as a checklist when doing loans; the other

set is used by the compliance officer when reviewing the loans for compliance. In

addition to the loan approval disclosure documents that will need to be signed by you

after you complete your loan application and receive your preliminary loan approval,

my staff will require copies of the following documents to formally approve your

mortgage for closing.

Pledging

Offering assets to a lender is collateral for a loan. Though the asset will be pledged to

the lender, it still owned by the borrower unless he/she defaults on the loan.

Hypothecation

A contract by which property is hypothecated; a right which a creditor has in or to the

property of his debtor, in virtue of which he may cause it to be sold and the price

appropriated in payment of his debt. This is a right in the thing. Arrangement where

the grantee (Creditor) has the possession and right to sell, but not the title

Credit Risk Grading (CRG)

CRG Credit Risk Grading is most important for issue for sanctioning any kind of

loan. Here bank classify their client overall status according some parameter and set

score. In our bank we classify our clients’ status in eight different classes.

Number Grading Score1 Superior Fully Cash secured, secured by government2 Good 85+3 Acceptable 75-844 Marginal/Watchlist 65-745 Special Mention 55-646 Substandard 45-54

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7 Doubtful 35-448 Bad/Los <35

If a clients Credit Risk grading goes to acceptable/Good/superior class then we may

submit the client’s proposal for loan approval.

3.11 Foreign Exchange Department

Foreign exchange is an important department of Mutual Trust Bank Limited,

which deals with import, export and foreign remittances. Foreign Exchange is an

International Department of the Bank. It facilitates international trade through its

various modes of services. It bridges between importers and exporters. This

department mainly deals in foreign currency, that’s why it is called foreign

exchange department.

This department is playing an important role in enhancing export earnings, which

aids economic growth and in turn it helps for the economic development. On the

other hand, it also helps to meet those goods and service, which are most

demandable and not adequate in our country.

Though, this department is not currently active in Jamuna Bank Limited

Motijheel Foreign Exchange – 0018 Branch.

3.11.1 Parts Of Exchange Departments

Import Export Remittance

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3.11.2 The Documentary Letter Of Credit

Letter of credit is a credit contract where the Opening/Issuing Bank is committed to

place an agreed amount of money at the beneficiary’s disposal under some agreed

conditions.

Forms Of Documentary Credit

1. Revocable Credit: A revocable credit is one where the issuing bank is at liberty to

revoke, which it is can cancel the credit at any time. According to UCPDC (Uniform

Customs for Practice of Documentary Credit), a revocable credit may be amended or

canceled by the issuing bank at any time and without prior notice to the beneficiary

before shipment of consignment against the L/C.

2. Irrevocable Credit: An irrevocable L/C is one, which cannot be revoked or

amended by the bank with the concurrence of the interested party.

3.11.3 Some Important Terms Of Letter Of Credit

Amendment of credit: Sometimes the importer may require amendment to be made

in the L/C, but this amendment must be made within the consent pf exporter,

otherwise amendment will have no validity.

Adding Confirmation: Sometimes the importer may not rely on the L/C issuing

bank. Exporter requires the L/C to be confirmed by another bank situated in his

country. Then on request of issuing bank, any bank in exporter’s country gives

guarantee about the payment. This is called confirming bank. By adding such

confirmation, confirming banks undertakes the liability to honor the bill of exchange

of exporter.

Validity and Expiry of Credit: All L/C must mention the expiry date of L/C with in

which the documents for payment /acceptance must be presented. This must exceed

the date of issuance of the bill of lading or other shipping documents, during which

presentation of documents for payment/acceptance must be made.

FOB (Free On Board): Under FOB basis, the exporter quotes the price covering all

his expenses until the goods duty packed are delivered “on board”, the carrying vessel

named and arranged by the buyer with the freight and the insurance being paid by the

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buyer. The importer bears any cost incurred and all risks from the time the goods are

placed on board inclusive of those arising out of the ship’s failure on berth.

Cost and Freight (C & F): In this case the exporter quotes the FOB price plus

insurance cost. The responsibilities of carrying out all formalities for shipment of the

goods developed upon the seller.

CIF (Cost, Insurance and Freight): Under CIF, the exporter quotes C&F price plus

the insurance cost. The responsibility of carrying out all formalities for shipment of

the goods develop upon the seller.

FAS (Free Alongside Ship): Under FAS, the seller quotes the price covering all his

charges until such time as goods are loaded on Train at the specified railway station.

The buyer is responsible for all charges from the time he takes delivery of all goods

from the exporter’s yard.

EX-Factory: The seller quotes the price of the goods ex-factory on the date agrees.

The importer is responsible for all further necessary arrangements and charges.

3.11.4 PARTIES TO LETTER OF CREDIT

1. Importer (Buyer)/Applicant

2. The issuing Bank (Opening Bank)

3. The Advising Bank/Notifying Bank

4. Exporter/seller

5. Confirming Bank

6. Negotiating Bank

7. The paying/Accepting/Remitting Bank

Applicant: The person who request the bank (opening bank) to issue letter of credit.

As per instructing and on behalf of the applicant bank opens L/C in line with the

terms and conditions of the seller contract between the buyer and the seller.

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Opening Bank/Issuing Bank: The bank which open/issue letter of credit on behalf of

the applicant/importer. Issuing bank’s obligation is to make payment against

presentation of documents drown strictly as per terms of the L/C.

Advising/Notifying Bank: The bank through which the L/C is advised/forward to the

beneficiary (exporter). The responsibility of the advising bank is to communicate the

L/C to the beneficiary after checking the authenticity of the credit. It acts as an agent

of the issuing bank without having any engagement on their part.

Beneficiary: Beneficiary of the L/C is the party in whose favor the letter of credit is

issued. Usually they are the seller or exporter.

beneficiary when presented complying credit terms. If the negotiations of documents

are not restricted to a particular bank in the L/C, normally negotiating is the banker of

the beneficiary.

Reimbursing / Paying Bank: The bank nominated in the letter of credit by the

issuing bank to make payments stipulated in the document, complying with

reimbursing bank.

Beneficiary 1. Contract Applicant

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SELLER BUYER

ISSUING BANKADVISING BANK

4. Advise of Doc. Credit

3. Documentary Credit

Figure: The Documentary Credit Cycle

The Plan of Payments By Means Of the Letter Of Credit

The description of process

1. The contract is concluded between the importer and exporter.

2. The importer addresses in serving bank with the request to let out irrevocable

the letter of credit (to open the letter of credit) according to condition to the

contract and transfers the sum of a covering under the letter of credit.

3. The bank of the buyer opens the required letter of credit and the bank-

correspondent asks to notify the supplier on opening the letter of credit.

4. Straight Bank (the bank-correspondent of the bank-emitter) informs the

supplier on opening of the letter of credit.

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2. Doc. Credit Application

5. The exporter organizes transportation of the goods by means of the conclusion

of the agreement with the transport or insurance company and receives the

transport invoice or insurance policy.

The exporter gives, according to the contract, the following documents:

Proforma Invoice,

Commercial Invoice,

Bill of loading,

Insurance policy,

Packing sheet/list,

Certificate of quality,

Others.

And other documents straitening to bank for payment under the documents. It is

supposed, that all documents correspond to conditions of the letter of credit. In this

case we proceed from the assumption, that straitening and executing bank is the same.

6. The executing bank checks all the documents on conformity to the letter of

credit and if not it is found out of any divergences are found out; executing

bank can work with one of the following ways:

* To send the documents for collection to Bank-Emitter,

* To pay the documents after reception from the exporter of the letter of

guarantee,

* To pay the documents after reception of consent with divergences from the

Bank-Emitter.

Jamuna Bank Limited

7. Executing Bank sends the documents to the bank-emitter according to the

conditions, stipulated by the letter of credit.

8. Executing bank sends the requirement about a covering (with the invoice of

the addressee under the letter of credit) to confirming bank.

9. The Bank-Emitter notifies the buyer on arrival of the documents.

10. The importer receives from the bank-emitter the documents.

11. The importer gives the invoice of the transport company for reception of

the goods.

12. After reception if the goods from the transport.

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Modes of Sales of Goods

1. Cash in advance: Risk is minimum. The proforma invoice is issued.

2. Open Account: Goods are sent first and payment is made afterwards. There

are no intermediaries. Proforma invoice is used here as well.

3. Documentary Collection: Same as an open account but the use of bank as an

intermediary. Here the risk is zero. Here the bank acts like an agent.

4. Documentary Credit: L/C

Here modes 1, 2 and 3 are built on good faith and relationship, but mode 4 comes

with a third party guarantor.

3.11.5 Back-To-Back L/C:

Back-to-back L/C means one credit backs another. It is new credit in favor of another

beneficiary. Sometimes beneficiary seller of a credit himself is unable to supply goods

specified in the L/C and required to purchase from another supplier by opening

second credit. Besides, the formalities and requirements for (L/C opening) the

following formalities and documents are also required for opening back-to-back L/C

1. Master L/C

2. Valid bonded wear house licenses

3. Quota allocation for quota items

4. ERC in addition to IRC

5. Indemnity/Undertaking

6. No objection from previous banker

7. Factory inspection certificate

8. BGMEA Membership

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RM activities implemented in Jamuna Bank Limited, Motijheel Foreign Exchange–

0018 Branch

CHAPTER- IV : Loans & Advances 39-51

4.1 Difference between loans and advances 39

4.2 CSR activities of Jamuna Bank Limited 39

4.3 Key Financial Indicators 40

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4.4 Product & Service of Jamuna Bank Ltd 41

4.5 Description of Different Loan product 42

4.6 Target Market for Loans & Advances 45

4.7 CREDIT CATEGORIES 48

4.8 Organization structure for credit operation 49

4.9 PREPARATION/PROCESSING OF CREDIT

PROPOSALS

50

4.10 CREDIT MONITORING 51

4.11 Some important customer 52

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4.1 Difference between loans and advances

Both are balance sheet items.

LOAN: Loan is an amount given for a specified period and is recoverable with a

particular interest rate.

ADVANCES: advance mean it is given for a temporary basis to meet out cause (say)

purchases, travel expenses etc, Interest is not charged on this advance amount.

4.2 CSR activities of Jamuna Bank Limited

Jamuna Bank Foundation (JBF), a non-profit subsidiary of Jamuna Bank Limited,

has established with a view to playing important role in the field of Corporate Social

Responsibilities for the cause of destitute/unprivileged segment of the society and for

socio-economic development of the country. The following onerous task of fulfilling

commitment to the society is commendably undertaken by Jamuna Bank Foundation

since its inception:

(1) Scholarship for the unprivileged & disabled but meritorious students, (2) Blood

donation by the employees of Jamuna Bank Limited, (3) Free eye camps, (4) Relief

for the disaster affected people, (5) Distribution of blankets among the cold prone

destitute, (6) Sewing machine training centers for assisting unprivileged women of the

society, (7) Launching anti-drug movement by arranging seminar, rally, publishing

stickers and established an anti-drug care center (now at Rokeya smarani, Mirpur,

Dhaka), (8) Old Home for the neglected old aged persons, (9) Arranging Art

competition for the children, (10) Holding seminar on Holy Ramadan & Qirat

competition, (11) Model Village at Thakurgoan, (12) Donation of Tk.50.00 lac to the

Muktijuddho Jadughor, (13) Medical Team at Biswa Ejtema (Tongi), (14) Solar

Village at Kishoregonj, (15) Vocational Training Center at Rayerbazar, Dhaka, (16)

Free Primary School for the slum dwellers at Rayerbazar, Dhaka, (17) Financial

assistance every month Tk. 25000/- to Mr. Binod Bihari Chowdhury, a valiant

freedom fighter who fought against British rule and who was a Co-fighter of Shaheed

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Masterda Surja Sen. The assistance will continue for rest of the time of his life, (18)

Financial Assistance of two martyred Army Officers in BDR Carnage at Peelkhana,

Dhaka and one Army Personnel killed in Helicopter crash at Ghatail, Tangail, (19)

Mobile Medical Team, (20) Relief for natural disaster affected Peoples, (21) Jamuna

Bank Madrasa at Rayerbazar, Dhaka, (22) Tree Plantation Program, (23) Financial

support to poor people for treatment, (24) Cleft Lip/Cleft Palate Operation (Country-

wide) and (25) many other activities.

4.3 Key Financial Indicators

Tk. In million

Particulars 2011 2010 2009 2008 2007

Deposit 70508.05 60673.56 42356.20 27307.94 20924.02

Loans & Advances

56611.79 49430.50 32287.66 21036.86 16617.45

Import 55907.00 61034.50 46685.00 30311.71 22191.84

Export 57929.40 41860.40 21407.00 18617.43 13990.33

Guarantee 5687.20 6620.00 2908.50 2648.40 2032.50

Remittance 3360.03 1594.11 2657.64 3165.00 2506.00

% NPLs 2.86 1.83 2.2 2.84 5.06

Profit after tax

1330.20 1066.38 923.12 476.43 89.11

Total Capital 7552.79 6350.02 3997.66 2444.34 1872.72

EPS (in Tk.) 3.65 2.92 5.67 3.62 0.73

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4.4 PRODUCT AND SERVICE OF JAMUNA BANK LTD

JBL is a full-service Bank with a diverse array of comprehensive range of carefully

tailored financial services and customer-friendly uncomplicated banking products

geared to meet the needs of all customer segments. JBL’s corporate culture is to look

for Professional excellence, new ideas & new methods to encourage creativity, to

provide best possible customer services. Products & Services of JBL can be broadly

classified as follows:

Products & Services of JBL

Deposit Products: Saving Account (SB) Current Account (CD) Short Term Deposit

(STD) Fixed Deposit Receipt

(FDR) Special Deposit

Schemes Lakhpati Deposit

Scheme Millionaire Deposit

Scheme Kotipati Deposit

Scheme Double Growth Deposit

Scheme Triple Growth Deposit

Scheme Monthly Benefit

Scheme Monthly Savings

Scheme Marriage Deposit

Scheme Education Savings

Scheme

Loan / Investment Products: General Loan Facility SME Credit SchemeRetail Credit Products

Project Financing Working Capital

Financing Agriculture Loan Consumer Credit Lease Financing Hire Purchase SME Loan House Building Loan Personal Loan For

Women Loan Against Share &

Securities Import Financing Export Financing Syndication Loan

Other Services / Electronic Products: International

Trade Finance Trading of Govt.

Treasury Bond & Other Govt. Securities

Corporate Banking

Remittance and collection

Tele Banking SMS Banking Internet Banking 24 hours banking:

Q-Cash ATM Facility

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Some Special Terms & Conditions for all the Schemes

Bank reserves the right to close the scheme if customers fail to deposit 3-

consecutive installments.

If the Scheme is closed within 6-months, customer will get the deposited amount

only and no interest/profit will be paid for the Scheme. If it is closed after 6-

months, customers will get the deposited amount along with the interest at the

normal savings rate up to the time of closure.

Duties and taxes on the deposit, if any, are payable by the customers as per

government rules.

The above figures are indicative only and subject to change from time to time.

Money Laundering Prevention Act shall be exercised as per rules of Bangladesh

Bank.

4.5 DESCRIPTION OF DIFFERENT LOAN PRODUCTS

Depending on the various nature of financing, all the lending activities have been

brought under the following major heads:

a) Loan (General)

Short term, Medium term & long term loans allowed to individual/ firm/ industries for

a specific purpose but for a definite period and generally repayable by installments by

under this head. This type of lending are financing under the categories.

Large & medium scale industry

Small & cottage industry

Agriculture

b) House building Loan (General)

This type of loan is allowed to individual or enterprise for construction of house,

like residential and commercial basis. The installment is made by monthly with in

a specific period.

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c) House building loan (staff)

Employee of the Jamuna Bank Limited can be take loan under this category for

purchase or construction of house.

d) Cash Credit (Hypo)

Advance allowed to individual or Firm for trading as well as wholesale purpose or

to industries to meet up the working capital requirements against hypothecation of

goods as Jamuna Bank Limited security fall under this type of lending. It is a

continuous credit. It is allowed Linder the categories.

Commercial lending - when the customer is other than a industry.

Working capital when the customer is an industry.

e) Cash Credit (Pledge)

Financial accommodation to both individual and firm for trading as well as for

wholesale or to industries as working capital against pledge of goods as Jamuna

security fall under this category. It is continuous credit.

f) Hire Purchase

It is installment credit under which the Hire Purchase agrees to take the goods oil

hire at a stated rental, which is inclusive of the repayment of principal as well as

interest inclusive of the re payment of principal as well as rent for adjustment of

the loan within a specified period.

g) Lease Financing

Lease means a contractual relationship between the owner of the asset and its user

for a specified period against mutually agreed upon rent. The owner is called the

Lesser and the user is called the Lessee. Lease finance is one of the most

convenient sources of financing of assets via machinery, equipment vehicle, etc.

The user of the assets i.e. Lessee is benefited through tax advantages, conserving

working capital and preserving debt capacity. Moreover, Lease is an off-balance

sheet item i.e. lease amount is not shown in the balance sheet of the lessee and

does not affect borrowing capacity. Leasing enables the lessee to avail the services

of a plant or equipment without making the investment or incurring debt

obligation. The Lessee can use the asset by paying a series of periodic amounts

called "lease payment" or "lease rentals" to the owner of the asset at the

predetermined rates and generally in advance. The payments may be made

44 | P a g e

monthly or quarterly. Jamuna Bank Ltd., the highly capitalized private

Commercial Bank in Bangladesh has introduced lease finance to facilitate funding

requirement of valued customers & growth of their business houses.

h) Consumer Credit Scheme (CCS)

It is a special credit scheme of the bank finance purchase Of Consumer's durable

to the fixed income group (like middle class, lower class, and can be upper class)

to raise their living standard. This loan allowed on soft terms against personal

guarantee and deposit of specified percentage of equity by the customer .The loan

is repayable by monthly installment within a fixed period.

i) SOD (General)

Advances allowed to the individual or firm against their financial obligation,

customer take SOD under lien oil FDR, PSP BSP, Insurance Policy or Share. Lien

must be made by specific bank margin. This may or may not be a continuous

credit.

j) SOD (Others)

Advanced allowed against of work order for execution of contractual works. It is

generally allowed for a definite period and specific purpose. It is not a continuous

credit.

k) LIM

This is temporary advance connected with import, which is known as post import

finance, it is “Commercial Lending”. Advances allowed for retirement of shipping

documents and release of goods by pledge in warehouse under bank's lock and

key.

l) LTR

Under this type of' credit tile goods are handed over to the importer in trust with

the arrangement that sale proceeds should be deposited to liquidate tile credits

within a given period.

m) Export Cash credit (ECC)

A Customer allowed for exports of goods that can apply for export cash credit.

Tile credit must be liquidated out of export proceeds within 180 days.

n) Packing Credit (PC)

It is also "Export Credit". The condition is as on the ECC. Credit against specific

L/C for processing or packing of goods to be exported.

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o) FDBP

Payment made to a party through purchase of a foreign documentary bills falls

under this head. This temporary advance is adjustable from the proceeds of the

negotiable shipping/ export documents. It falls tinder the category Export Credit".

p) LDBP

Payment made to a party through purchase of foreign documentary bills under this

head. This temporary liability is adjustable from proceeds of the bill.

q) Time Loan

This is one time financial accommodation for short period maximum 12 months to

meet some specific purpose. The loan is adjustable within the validity and not

renewable and no transaction is allowed.

4.6 TARGET MARKET FOR LOANS & ADVANCES

Agro Processing Industry

Textile Spinning, Weaving, Knitting and Dyeing & Printing Industry

Export Oriented Garments, Sweater and Garments Accessories

Food & Allied Industry

Paper & Paper Products

Engineering, Steel Mills, Chemical, Pharmaceuticals, etc.

Telecommunications

Computer Software and Information Technology

Manufacturing of artificial flowers

Electronics

Infrastructure

Oil & Gas

Liquefied Petroleum Gas (LPG)

Compressed Natural Gas (CNG)

Ceramics

Small &Medium Enterprises (SME)

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4.7 CREDIT CATEGORIES

As initiated by Bangladesh Bank vide BCD Circular No. 33 dated 16-11-89 different

kinds of lending were subdivided into 11 categories i.e. 01-01-90 which was

subsequently reduced to 9 vide BCD Circular No. 23 dated 09-10-93 and again to 7

sectors vide BCD Circular No.8 dated 25.04.94 for fixation of rates of interest by the

individual banks on competitive basis depending on the cost of Funds, prevailing

market condition and monetary trend of the country.

Loan and advances have primarily been divided into two major groups:

a) Fixed term loan: These are the advances made by the Bank with fixed

repayment schedules. The term of loan are defined as follows:

Short term : Up to 12 months

Medium term : More than 12 and up to 36 months

Long Term : More than 36 months

b) Continuing credits: These are the advances having no fixed repayment

schedule, but have an expiry date at which it is renewable on satisfactory

performance.

Further all categories of loans are accommodated under the 7 sectors as under:

I. Agriculture

Credit facilities to the agricultural sector falls under this category. It is subdivided

into two major heads:

a) Loans to primary producers: This sector of agricultural financing refers to the

credit facilities allowed to production units engaged in farming, fishing,

forestry or livestock.

Loans to processors or traders of agricultural products are not to be categories

as agricultural loans. Loans to tea gardens for production are treated as

agricultural loan, but loans to tea gardens for export should be treated under

the category "Export Credit". Similarly medium and long-term loans to tea

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gardens are categorized as industrial term lending.

b) Loans to input dealers/distributors: It refers to the financing allowed to input

dealers and (or) distributors in the agricultural sectors. Agricultural loans may

include short, medium and long fixed term loans as well as continuing credits.

As such, it may fall under the head "Loan (Gen)/Hire-Purchase/Lease

Financing".

II. Term Loan for Large & Medium Scale Industry

(“Large Industry” is defined to include all industrial enterprises whose total fixed

cost / replacement cost excluding land and factory building is over Tk. 100 million.

Medium Industry is defined to include all industrial enterprises whose total fixed

cost/ replacement cost excluding value of land and factory building is between

Tk.15 million to Tk. 100 million.) This category of advances accommodate the

medium and long term financing for acquiring capital machinery of new Industries

or for BMRE of the existing units who are engaged in manufacturing goods and

services. Term financing to tea gardens may also be included in this category

depending on the nature and size. As the financing under this category have fixed

repayment schedule it falls under the head "Loan (Gen)/Hire-Purchase/Lease

Financing".

III. Term Loans to Small & Cottage Industries

(“Small Industry” will mean enterprises whose total fixed cost / replacement cost

excluding land and factory building is not more than 15 million.) No short term or

continuing credits are to be included in this category. Medium & Long term

credits are also included under this category. Like the Large & Medium Scale

Industry it is also allowed in the form of "Loan (Gen)/Hire Purchase/Lease

Financing".

IV. Working Capital

Loans allowed to the manufacturing units to meet their working capital

requirements, irrespective of their size - big, medium or small, fall under the

category. These are usually continuing credits and as such fall under the head

"Cash Credit"

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V. Export Credit

Credit facilities allowed to facilitate export of all items against Letter of Credit

and/or confirmed export orders fall under this category. It is accommodated

under the heads "Export Cash Credit (ECC)", Packing Credit (PC), Foreign

Documentary Bills Purchased (FDBP), Local Export Bills Purchased etc.

However, bills discounted / purchased against supply of goods and services to

companies / industries which are located in the country and not involved in

export / deemed export shall not fall under export credit.

VI. Commercial Lending

Short term loans and continuing credits allowed for commercial purposes other

than exports fall under this category. It includes import financing, financing for

internal trade, service establishment, etc. No medium and long term loans are

accommodated here. This category of advances are allowed in the form of (I)

Loan against imported merchandise (LlM), (ii) Loan against trust receipt (LTR),

(iii) Payment against import documents (PAD), (iv) Secured Overdrafts (SOD),

(v) Cash Credit (CC), (vi) Loan (Gen), etc. for commercial purposes.

VII. Others

Any loan that does not fall in any of the above categories is considered under the

category "Others". It includes loan to (I) transport equipments, (ii) construction

works including housing (commercial/residential), (iii) work order finance, (iv)

personal loans, etc.

VIII. SME Financing:

Bangladesh Bank vide BRPD Circular No. 07 dated 03.11.2004 has given

prudential regulatory guidelines for Small Enterprise Financing.

The role of Small and Medium Enterprise is very crucial in the economic

development of the county. Jamuna Bank Limited has separate SME Financing

Scheme duly approved by the Board. There are several products, modalities and loan

ceiling for SME financing. SME Cell within Corporate Division handles SME loans.

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4.8 ORGANIZATIONAL STRUCTURE FOR CREDIT OPERATION

Head Office

Corporate Division

Credit Division

Credit Administration

Division

Internal Audit

General CreditDeptt.

SMEDeptt.

Trade Finance Deptt.

LeasingDeptt.

Syndication & Structured

Finance Deptt.

CRM Deptt.

Recovery and Legal Deptt.

Branch

Head of Branch

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Board

EC

MD

DMD

Credit Marketing Team

Credit approval Team

Credit administration Team

Credit Recovery Team

4.9 PREPARATION/PROCESSING OF CREDIT PROPOSALS

Credit Proposals shall be prepared in the approved format of the Bank

enclosing/furnishing documents/papers/information:

1. Pre-sanction Inspection Report containing KYC

2. Request for Credit limit of customers Project Profile/Profile of Business

3. Copy of Trade License duly attested

4. Copy of TIN Certificate

5. Certified copy of Memorandum and Articles of Association, Certificate of

Incorporation, Certificate of Commencement of Business, Resolution of

Board of Director, Partnership Deed (where applicable)

6. Personal Net worth Statement of the Owner/Director/Partner/Proprietor in

Bank's format

7. Valuation Certificate in Bank's format along with photograph of collateral

security with detail particulars on the back duly authenticated by the Branch

Manager

8. Three (3) years Balance Sheet and Profit and Loss A/C

9. CIB Enquiry Form duly filled in

10. Credit Risk Grading for credit facilities irrespective of amount other than

consumer loan and SME loan covered under consumer and SME guidelines.

11. Stock Report duly verified

12. Credit Report from other Banks

13. Indent/Preformed Invoice/ Quotation (where applicable)

14. Price Verification Report (where applicable)

15. Statement of A/C (CD/SB/CC) for the last twelve (12) months. In case the

customer maintaining account with other Bank. Statement of Account for the

last twelve (12) months of the concerned Bank should be furnished.

16. In case of renewed/enhancement of credit facility Statement of A/C showing

Debit Turnover, Credit Turnover, highest drawing, lowest drawing, total

income earned, detailed position of existing liabilities of the customer i.e. Date

of sanction, Date of Expiry, Present outstanding, Remarks, if any.

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17. Declaration of the customer of the name of sister/allied concerns and liabilities

with other Banks, if any, and an undertaking to the effect that they have no

liability beyond those declared

18. In case of L/C proposal, detailed performance of L/C during the last year i.e.

No.. and date of L/C opened, commodity, L/C value, Date of creation of PAD,

date of retirement, mode of retirement etc.

19. In case of BTB L/C proposal -

20. Detailed list of machinery, production capacity, working capital (BTB L/C)

assessment, existing export L/C in hand mentioning date of shipment, detailed

position of outstanding BTB L/C/Accepted Bills, progress of production and

expected date of shipment, statement of outstanding FDBP/IDBP, if any,

Quota Position, Inspection Report, Copy of valid Bonded Ware House

License, Customs Clearance of dispute, if any.

21. Whether the applicant is Shareholder/Director of Jamuna Bank Limited as per

definition of Banking Companies Act.

22. Justification/consideration for the facility.

4.10 CREDIT MONITORING

a) Computer generated list of Exceptional Advance to be obtained from the

Branches on daily basis which shall be examined at CRM and any major

exception be brought to the knowledge of Senior Management.

b) Credit Administration Unit, Head Office shall bring the list of documentation

shortfall/deficiencies to the knowledge of Senior Management at regular basis

and corrective measures shall be taken.

c) Credit turnover in cash credit and overdraft accounts, past dues, collateral

shortfall, covenant Branch shall be reviewed on a regular basis.

d) Recurring transactions are not allowed for one time transaction/limit.

e) Credit limit expiry date diary shall be maintained and followed-up.

f) Use of Loan money shall be monitored through analysis of financial

statements.

g) Financial statements of the customers shall be obtained on a regular basis and

changes in the financial condition shall be monitored.

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h) Borrowers shall be communicated ahead of time as and when installments are

due.

i) Non-payment and late payment of installment shall be communicated to the

Senior Management.

j) CIB Report from Bangladesh Bank is obtained and reviewed on a periodic

basis.

k) Progress against work order/contract financed by the Bank is periodically

reviewed.

l) Timely renewal of limit shall be ensured informing Branches two months

ahead of expiry dates.

4.11 Some important customers:

1. Windy apparel Ltd.

2. Knit horizon Ltd.

3. Darda knitwear Ltd.

4. Epyllion Ltd.

5. Dress up Ltd.

6. Mirabella dress Ltd.

7. Tuba garments Ltd.

8. Tuba fashion Ltd.

9. Tuba textile Ltd.

10. Jamuna knitting & dyeing Ltd.

11. Imperial saweater Ltd.

12. Biswas synthetic Ltd.

13. Symtex Ltd.

14. Mrs industrial Ltd.

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CHAPTER- V : Findings And Recommendation

5.1 SWOT Analysis

5.1.1 Strength

5.1.2 Weakness

5.1.3 Opportunity

5.1.4 Threats

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54

54

55

56

5.2 The Overall Findings of Jamuna Bank Limited 56

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5.1 SWOT Analysis

SWOT analysis is the detailed study of an organization’s exposure and potential in

perspective of its strength, weakness, opportunity and threat. This facilitates the

organization to make their existing line of performance and also foresee the future to

improve their performance in comparison to their competitors. As though this tool, an

organization can also study its current position, it can also be considered as an

important tool for making changes in the strategic management of the organization.

5.1.1 Strengths:

— Jamuna Bank Limited has already established a favorable reputation in the

banking industry of the country. It is one of the leading private sector

commercial banks in Bangladesh. The bank has already shown a tremendous

growth in the profits and deposits sector.

— Jamuna Bank Limited has provided its banking service with a top leadership

and management position.

— Jamuna Bank Limited has already achieved a high growth rate accompanied

by an impressive profit growth rate in 2011. The number of deposits and the

loans and advances are also increasing rapidly.

— Jamuna Bank Limited has an interactive corporate culture. The working

environment is very friendly, interactive and informal. And, there are no hidden

barriers or boundaries while communicate between the superior and the

employees. This corporate culture provides as a great motivation factor among

the employees.

— Jamuna Bank Limited has the reputation of being the provider of good quality

services to its potential customers.

5.1.2 Weaknesses:

— The main important thing is that the bank has no clear mission statement and

strategic plan. The bank doesn’t have any long-term strategies of whether it

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wants to focus on retail banking or become a corporate bank. The path of the

future should be determined now with a strong feasible strategic plan.

— The bank failed to provide a strong quality-recruitment policy in the lower and

some mid level position. As a result the services of the bank seem to be Deus

in the present days.

__ The poor service quality has become a major problem for the bank. The

quality of the service at Jamuna Bank Limited is higher than the Dhaka Bank,

NCC BANK or Dutch Bangla Bank etc. But the bank has to compete with the

Multinational Bank located here.

— Some of the job in Jamuna Bank Limited has no growth or advancement path.

So lack of motivation exists in persons filling those positions. This is a

weakness of Mutual Trust that it is having a group of unsatisfied employees.

__ In terms of promotional sector, Jamuna Bank Limited has to more emphasize

on that. They have to follow aggressive marketing campaign.

__ The default risks of all term loans have to be minimized in order to sustain in

the financial market. Because of default risk the organization may become

bankrupt. Jamuna Bank Limited has to remain vigilant about this problem so

that proactive strategies are taken to minimize this problem if not eliminate.

5.1.3 Opportunities:

_ In order to reduce the business risk, Jamuna Bank Limited has to expand their

business portfolio. The management can consider options of starting merchant

banking or diversify into leasing and insurance sector.

— The activity in the secondary financial market has direct impact on the primary

financial market. Banks operate in the primary financial market. Investment in

the secondary market governs the national economic activity. Activity in the

national economy controls the business of the bank.

— Opportunity in retail banking lies in the fact that the country’s increased

population is gradually learning to adopt consumer finance. The bulk of our

population is middle class. Different types of retail lending products have great

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appeal to this class. So a wide variety of retail lending products has a very large

and easily pregnable market.

— A large number of private banks coming into the market in the recent time. In

this competitive environment Jamuna Bank Limited must expand its product

line to enhance its sustainable competitive advantage. In that product line, they

can introduce the ATM to compete with the local and the foreign bank. They

can introduce credit card and debit card system for their potential customer.

— In addition of those things, Jamuna Bank Limited can introduce special

corporate scheme for the corporate customer or officer who have an income

level higher from the service holder. At the same time, they can introduce

scheme or loan for various service holders. And the scheme should be separate

according to the professions, such as engineers, lawyers, doctors.

5.1.4 Threats:

— All sustaining multinational banks and upcoming foreign and private banks

pose significant threats to Jamuna Bank Limited. If that happens the intensity

of competition will rise further and banks will have to develop strategies to

compete against these local and foreign banks.

Other commercial banks are offering higher salary that may create problem for Jamuna Bank Limited to retain their experienced

5.2 The Overall Findings of Jamuna Bank Limited

From the above observations it was found that most of customers liked the policy of

the bank regarding reduced bank charges. Moreover, the clients are also satisfied with

the bank’s policy on no hidden charge, trustworthy banker-customer relationship and

dependable credit counseling. The customers also opine that Jamuna Bank provides

privacy of credit information. But very Poor performance was observed regarding

collateral security free lending and widest branch network for credit operation.

However most of the customers (73%) give favorable opinion regarding credit

management of Jamuna Bank Limited.

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So there is more opportunity for growth and development by increasing branch

network and utilizing resources. If the bank considers both the positive and negative

view of the customers regarding Credit management and emphasize those with great

importance the bank will be able to attract more customers.

CHAPTER- VII : Conclusion & Recommendations 58-59

6.1 Recommendations 58

6.2 Conclusion 59

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6.1 RECOMMENDATION

There are some recommendations for Jamuna Bank Limited that has to be mentioned

as below:

Should use advanced software in clearing

Train up the employees to work more efficiently

Increase the number of employees

The branch must start money exchange facilities

Bank should offer more products and services

Expand the number of branches not only in urban area but also in rural area

The branch should come up with more marketing, CRM activities.

The branch should come up with some effective CSR activities.

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6.2 Conclusion

Today’s service industry is getting more competitive, the banking service is no

exception. In the context of banking great importance is needed to ensure more

customer satisfaction. Therefore, from this study Jamuna Bank Limited can obtain the

indications on which of the issues they have to put more emphasis on to hold the

greater customer adaptation in terms of credit management.

Jamuna Bank Limited made good progress in this segment. This bank follows all the

credit & risk management guidelines of Bangladesh Bank issued from time to time.

Being a compliance Bank it maintains recovery management up to the maximum

possible extent. As a result, classified loans have been reduced significantly.

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BIBLIOGRAPHY

1. Jamuna Bank Limited Annual Report-2011.

2. Credit Policy & Guidelines of Jamuna Bank Limited

3. Web-site of Jamuna Bank: www.Jamunabankbd.com

4. Website: www.wikipedia.com

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